Can You Buy A House With Cash In Ontario?
Have you ever wondered how easy purchasing your home could be if you didn’t have to undergo the formalities of signing a mortgage deal? Of course, you can purchase a house with cash in Ontario. But while you may think this means no hassle of monthly payments, and no complicated process of applying for a mortgage, the process is not that easy.
Shelling out the entire amount in cash may not be the most intelligent financial move. Even if you have got some savings, you should weigh your options. After all, you need to prioritize your long-term financial goals.
In Canada, moneyed millennials are already delving into homeownership. No wonder your house would be one of the best investments on a long-term basis. You may decide to go for a house, townhome, condo or opt for any other configuration. If you are not sure whether you should use your cash for purchasing, this guide will bail you out.
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Can Purchasing A House With Cash Land You In Trouble?
As long as you have the proper paperwork in place and adhere to the legalities, purchasing your house with cash shouldn’t be an issue. Of course, people might raise their eyebrows regarding the source of your money. You simply need to report the transaction to the government when you purchase anything over $10,000.
This would establish your credibility regarding the source of your income. Often sellers are skeptical when it comes to cash transactions, and they would like to go for some additional scrutiny. You need to get a good lawyer to carry out the necessary paperwork for you. Ensure that you are on the right track with the deed transfer of the property, registration, and sale.
Moreover, you need to plan your long-term finances well when you get together your savings to purchase a house.
Benefits Of Paying In Cash When You Purchase A House
In the first place, you would make a clear saving on the interest that you would be shelling out on a mortgage. This can amount to thousands of dollars over twenty to thirty years, depending on your home loan tenure. Apart from this, you have a plethora of advantages when you purchase the property in cash.
1. Power To Negotiate A Lower Price
Cash is king when you deal in the real estate industry. Remember, cash purchases are rare in this sector, and what sellers crave is certainty. Of course, they look for the highest price, but they also tend to accept offers from buyers with ready cash.
No seller would want to waste their time, waiting over months only to hear that the buyer has stumbled with financing. With cash offerings, you can reassure the sellers that you will definitely close the deal. After all, you are not financially dependent on someone or waiting for approval from a lender.
With no creditor involved in the process, you can close the deal much faster. This empowers you to negotiate the price.
2. No Dependence On Creditors
When paying with cash, you remain beyond the whims of the lender. You won’t undergo the nail-biting moments, thinking whether the creditor will settle the deal on time. With the power of cash, you remain the master of your destiny.
3. No Rent Payment Or Mortgage
Housing expenses account for the highest monthly costs for most individuals. With no mortgage loan repayment schedule chasing you, you can drastically slash down your living costs. When you go for a loan, you remain under the obligation to pay the installments even when you come under financial hardships.
The situation becomes detrimental if the borrower loses the job. However, when you make a cash payment, you can enjoy mental peace.
4. Eliminate closing costs
You can effectively ditch unnecessary closing costs when you pay in cash.
Moreover, you won’t have other fees to pay, including document preparation fees, underwriting fees, administrative fees, and processing fees. In the end, you won’t be squeezed financially when you are not dependent on your lender.
5. Ditch Mortgage Insurance
Most lenders would require you to purchase mortgage insurance if you acquire a home loan. Whether it comes to PMI (private mortgage insurance) or (mortgage insurance premium), you would be draining your resources. You can dodge this expense when you have enough cash to finance your home yourself.
Disadvantages Of Paying In Cash When You Purchase A House
Homeowners need to take guard against the following drawbacks when they shell out cash for purchasing their home.
1. Opportunity Cost
Investment experts largely recommend diversifying the portfolio. However, with cash payment for your house, you lock most of your resources in a fixed asset. Although the real estate market has greater stability, it’s always wise not to put all your eggs in one basket.
2. Insufficient liquidity
Once you have channelized all your funds to purchase your house, you might be cash-strapped in the case of an emergency.
Endnote
As long as you manage your funds well, you can always reap the advantages of your financial freedom. However, it’s always advisable to weigh your finances and consult with the experts before delving into the real estate market.
Spending all your savings on your home might lead to missing out on regular savings. Therefore, you need to be meticulous with your approach when you make your decision.